On the sidelines of the General Shareholders Meeting of Africa50 held in mid-July in Marrakech, Morocco, Financial Afrik spoke with Tshepidi Moremong, Chief Operating Officer (COO) to discuss highlights of the organization’s strategic direction. In office since 2021, Ms. Moremong leads a multi-disciplinary team responsible for fundraising, investor relations, strategy, human resources and administration, communications and environmental, social and governance. She has twenty-two years of experience in strategic leadership in the fields of private equity, investment banking and business development.
Following the conclusion of the Africa50 annual General Shareholders meeting (GSM), what are the commitments made and the state of the investment portfolio?
We ended our general meeting on a high note with the arrival of a new member – which was the Government of Cabo Verde as the 29th shareholder country, bringing our total shareholder base to 32. We have seen strong resilience within our portfolio, especially with the impact of COVID19. Additionally, we have seen a resurgence in activity post Covid. Our current portfolio which is valued at US$5billion comprises 7 assets across multiple sectors including power, ICT and transport and logistics. We have 5 additional assets under development, 2 in construction and we have had one exit. Our investor base is expanding with 32 shareholders which includes 29 countries and 2 central banks and the African development bank. Our pipeline includes geographically and sectorally diversified projects (power, including gas generation and distribution, hydroelectricity, communication and digital infrastructure, transport and logistics – including urban transportation). Among other things, we are involved in hydropower projects in Madagascar and Cameroon, the construction of a bridge between the two Congos, a two-lane highway in Mauritania and digital infrastructure in Rwanda.
Is there a need for more infrastructure financing in Africa?
Yes, we believe the projects we are developing and financing are significant and transformative to the economies as well as the communities. This obviously required more financing capacity, and thus the addition of Cabo Verde and our ongoing discussions with other African countries and institutional investors are critical in expanding our funding base as an institution we are in discussions with several countries to onboard them as new shareholders. Pre-covid, Africa’s infrastructure financing gap was quite large – about $68-$108 billion per year according to the AfDB and given the effect of the pandemic, the gap has widened even further – and government funding alone cannot bridge that gap. So, the private sector has a key role to play here.
How do you manage to cover the risk of infrastructure projects in a continent deemed too risky?
While we have to acknowledge that there are risks involved in investing in infrastructure projects in Africa just like in other developing country, it is also s time to dispel the myth that investments in Africa are riskier than elsewhere. In 2020, a Moody’s study found that Africa’s cumulative 10-year infrastructure debt default rate (of 1.9%) was the second lowest worldwide, after the Middle East, and that it had a 100% infrastructure debt recovery rate. Aside from that, the rate of return on infrastructure in Africa is good – better than what we generally see in other emerging regions – which means the higher perceived risks are exaggerated. So, we must share the success stories and investors must look at the opportunities that our continent can offer: the continent has tremendous natural and human resources, it is the youngest continent from a demographic perspective, with a growing middle class and one of the highest urbanization rates in the world. Therefore, there is real work to be done in changing the narrative and bridging this risk perception gap. We need to talk more often about our successes and ensure our narrative is not drowned out.
Can you tell us more about the new infrastructure acceleration fund that has been launched by Africa50?
Africa50’s mandate is clear, in addition to developing bankable infrastructure projects and accelerating investment into infrastructure, our role is to mobilize capital from diverse sources into African infrastructure. The infrastructure acceleration fund is therefore targeting African and international institutional investors, including development finance institutions. It is being led by Mr. Vincent Le Guennou with a team that has extensive experience in infrastructure investment across the continent and globally. We are targeting to raise US$500million.
During the Shareholders Meeting, the term Asset Recyling was mentioned as one of the areas of focus for Africa 50. Please can you explain what that means?
Asset Recycling is an equity release mechanism which can assist African Governments in accessing additional funding for infrastructure financing. Many of our governments have financed assets which have now been derisked. We are advocating that they can monetize these assets through their concessioning and the capital released from this process can be reinvested into other infrastructure projects without impact increasing the sovereign debt burden.
Finance is transitioning from fossil fuels to renewables. Do you have a share of green infrastructure finance in your portfolio?
Indeed, we have several green infrastructure projects we have financed. In Cameroon the Nachtigal 400 MW hydropower plant that is currently under construction, we financed, together with Scatec and Norfund the 400MW Benbansolar PV plant in Egypt, and we currently have a 120MW hydropower plant under development in Madagascar. That’s about 1000 MW in renewables financing. In addition, together with our partners, we were able to refinance the debt of Benban through the through the issuance of a 19-year USD 334.5 million non-recourse green project bond. As an organization we are keen to ensure the continued focus on renewable and green infrastructure financing, but we are also clear that the financing of natural gas projects in power generation is also critical as a transition energy and the industrialization of Africa.
